Bankruptcy may be your best way to a fresh start, and I can give you the information you need to decide what is best for you and your family. At O’Steen Law Firm, we understand that serious financial difficulties can invade every area of your life, causing undue stress and feelings of desperation. However, bankruptcy allows you to take charge of your financial situation and obtain a fresh start free from bill collectors and collection letters.
Click on any of these situations to see how each is affected by filing bankruptcy:
Chapter 7 BankruptcyShow
In a Chapter 7 bankruptcy, most unsecured debt (i.e. credit card, medical and personal loan) is eliminated. However, student loans, most taxes, child support, and debt incurred within 90 days before filing the bankruptcy may not be dischargeable. For secured debts (such as cars, homes, electronics and furniture, etc.), debtors filing chapter 7 bankruptcy can generally choose to either give back the collateral (extinguishing the debt), or keep the collateral and sign a reaffirmation, which is a way of becoming responsible for the debt despite being discharged in bankruptcy. Chapter 7 give most individuals a fresh start.
Chapter 13 BankruptcyShow
In a Chapter 13 bankruptcy, most debts are combined and restructured to enable the debtor to make an affordable monthly payment to the bankruptcy Trustee. The Trustee uses the debtor’s monthly payment to repay the portion of debt the law requires. Unlike Chapter 7, Chapter 13 bankruptcy enables the debtor to pay past child support and most taxes, without additional interest or penalties, and to pay on past-due mortgage or car payments without losing the property. Chapter 13 can save your home from foreclosure if you are behind on payments or owe property taxes!
Foreclosure is the civil process of “repossession” of a parcel of real property. Taking a piece of real property in South Carolina has always been considered a very drastic remedy. Any chapter of bankruptcy will stop the sale of real property, but stopping the sale will not allow you to keep your house, unless you have a plan in place to catch up the missed payments (called arrearages) and show the ability to make future payments timely. Chapter 7 will stop the foreclosure sale, but will NOT provide you an opportunity to catch up on the mortgage payments or make future payments. Chapter 7 does not require any future payments to the US Trustee or any creditor, therefore any property you owe on and are not current with payments will usually be surrendered. A chapter 13 will stop the sale and allow you time to catch up the payments you missed.
Once you file either chapter 7 or 13, all collections must stop. No more phone calls, collections letters, suits, or garnishments. There is only one exception, domestic support incurred after you file for relief (see Domestic Support Obligation to the right if this is a concern).
Finance companies are known for loaning small amounts of money and taking a lien in household goods or other things you own. Usually, finance loans are refinanced at a high rate of interest with the same company over and over again. Soon the small loan has grown to a large loan, you have nothing to show for the loan and the finance company’s employee is threatening to take your stuff. Most of these loans are discharged without being repaid in bankruptcy. Others can only be valued or will have to repaid at a lower interest rate. The handling of each lien is dependent on the lien. If the lien is on your household goods, then the lien can be avoided and will not have to be paid. As part of the free consultation, I will explain how each debt can be treated.
Payday and check advance loans are simply a way to allow you to spend your next pay check before you get it. So when you get paid, you can either take out another loan or bounce the check you wrote to the payday company. In bankruptcy, these loans are dischargeable. There are a precaution you have to take prior to bankruptcy so be sure and mention that you have these type loans at your free consultation.
Title Loans are the most destructive type of loan. Title loans companies give you a small loan, usually $600 to $1,200, and take a lien on your vehicle’s title as security. Knowing how important a vehicle is to your life, allows them to force you to make your payments. Usually forcing you to make high interest payments until you are not able to make the payments anymore, then they take your vehicle. Under bankruptcy protection, most title loans can be paid off over 5 years at an interest rate of 5.25% (as of May 15, 2009) in addition to valuing the loan to reduce the amount owed. Every case is dependent on the value of the vehicle in relation to the loan. As part of your free initial consultation, we will describe the treatment that can be applied to your specific situation.
Repossessed assets can be recovered if the repossession was very recent. We have to move fast and must have lots of information, but we can usually get your vehicle back. If you do not want you asset back, the debt will be dischargeable in a bankruptcy.
Medical Bills that are incurred for necessary medical services are dischargeable in a bankruptcy.
Lawsuits come in many varieties. All are stopped at the moment a bankruptcy is started. In most cases the matter will be ended by the bankruptcy filing and the debt will be discharged. Some related to Fraud, could be restarted with the court’s permission after a hearing. We can talk about how the rules will be applied to your specific situation. It is always better to file a bankruptcy case prior to a judgment being given in a civil action.
Credit Card DebtShow
Credit Card Debts are the most prevalent type of unsecured debt, and easily discharged. Credit card debt incurred within 90 days of filing bankruptcy may not be dischargeable. If you have incurred credit card debt in the last 90 days please mention that at your Free consultation.
Domestic Support ObligationShow
Domestic Support obligations are divided into two types. Pre-petition (payable before you file) DSO can be added to a chapter 13 plan and paid without interest over the next 5 years. Post-petition must be kept current or your case will be dismissed.
Student Loans will be the next crisis to hit America. Student loans are not dischargeable, but can be delayed in a bankruptcy. We can discuss how you can handle student loans in a bankruptcy case to maximize your ability to pay this type of debt.
Mortgage Payments and Escrow ItemsShow
Mortgage payments and escrow items are divided between those that came due prior to filing a bankruptcy case and those that come due after the filing. All mortgage payments and escrow payments along with all fees and cost related to the mortgage, which came due prior to the filing of the bankruptcy case can be paid over the life of the chapter 13 (36 to 60 months) without interest. A chapter 13 will stop all foreclosures and allow time to make up the missed payments. Mortgage payments coming due after a bankruptcy case has been filed will need to be paid during the grace period. Usually an additional month can be put into the plan. Please ask about this at the free initial consultation.
Some judgments can be avoided (deleted) others can not. Which can and which can not depends on the type of assets you own and the collection procedures the judgment holder has taken. Voiding a judgment is very complicated and is specific to each clients situation. I can better advise you at the free consultation. If you have concerns about judgments being voided, mention it when we meet.
Being delinquent on vehicle payments can be more detrimental to your financial situation than other types of debt. We all know how important it is to have reliable transportation. Car lenders are quick to repossess. If you are behind on your car payments, Chapter 13 will allow you time to catch-up the payments. Chapter 7 requires you to agree to reaffirm the debt for a vehicle if you intend to keep the vehicle.
Personal loans are treated the same a credit cards above.
The most complicate type of debt is tax debt. It can be dischargeable, nondischargeable or secured and partially dischargeable. How this debt is treated depends on the age, type and the actions of the taxing authority in securing the debt. All tax debt can be handled in a Chapter 13, but some of the requirements in dealing with secured debt limit the benefits. Call to schedule a free initial consultation, and we can see what treatment your tax debt may be require.